I think that KYC can be dangerous only when they can't safely store and protect users private data. But you can't call it as useless since it is important to avoid fraud, multiple accounts creation spam, scams, hacks etc.

For example, in Bitmex at the past when the market was moving the servers were overloading and people couldnt place orders. That was happening not only because of the high volatility but also because some people were using many accounts to spam low size orders and cause overload to the server resulting in huge wicks and massive liquidations. Once bitmex implemented KYC, these overload issues vanished.